Over the years we have acted for solicitors against insurers for cover against claims for reimbursement of fees received which have been hotly contested. In the recent case of Royal & Sun Alliance Insurance Ltd [2022] EWHC 2589 (Comm), Northern Irish solicitors succeeded in a claim for indemnity from insurers in respect of such a claim; the judge concluded that a claim for damages against the firm in the amount of its fee to which it had acquired a contractual right under a subsisting contract constitutes a loss to the firm for which they are entitled, if the other pre-requisites to cover are established, to an indemnity under the policy. (See www.legalrisk.co.uk/News for a link.)
At a recent conference in the USA, two underwriters indicated that they expect that in 2024-5 we shall see claims attributable to home working during the Covid lockdowns attributable to the loss of learning by osmosis and junior lawyers not asking questions because they do not know what to ask and making decisions they should not be making. These are gaps which persist with hybrid working.
The SRA has issued a further consultation paper, Consumer protection for post six-year negligence, in its long-running campaign to replace SIF, which provides indemnity to solicitors and their staff after expiry of the compulsory six years’ runoff under the Minimum Terms and Conditions.
The good news is that the SRA now accept that the appropriate solution is an indemnity fund rather than a discretionary compensation fund; previous proposals for the latter would not have provided protection for solicitors and their staff, and would have provided inadequate protection for claimants. The SRA’s acceptance of this fundamental principle is welcome.
However, the SRA’s proposal is predicated on savings of £300,000 – £400,000 to be made by taking the arrangements in-house. The SRA decided to do this at its September 2022 board meeting. We believe the underlying analysis is flawed and those savings are unlikely to be achieved. We explain why in more detail in an article on our website.
The deadline for submission of responses is 3 January 2023. For the reasons explained above, responses should not in our view be confined to the two questions posed by the SRA, but the more fundamental question of whether the decision to bring the indemnity fund in-house is warranted to avoid post-transaction remorse, a concept well known to those experienced in defending professional liability claims.
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